[WSBARP] Taking Title Subject to Lien

[Kary Krismer]

My analysis is slightly different than and/or expands on Dwight's first 
paragraph.


6.13.090 was enacted after a Supreme Court decision held that a judgment 
lien would not attach to homestead property until after an appraisal 
procedure was done in the court proceeding.  That obviously would be 
rather cumbersome, so the recording procedure was enacted as a 
substitute.  I don't remember the name of that case, but it is probably 
a year or two prior to the enactment of 6.13.090, whenever that was (I'm 
guessing pre-1984).


That said, I don't think the bankruptcy filing claiming homestead is 
conclusive.  I agree that if it did not attach pre-petition that nothing 
could be done after the filing to get it to attach without violating the 
stay and/or discharge order.  But that assumes the property was 
homestead property the entire period after entry of the judgment.  But 
that might not be the case.  For example assume these facts:  The 
judgment was entered, two years later the judgment debtor started 
renting the property out for five years, then lived in it again for two 
years, then filed bankruptcy claiming homestead.  I would argue the 
judgment attached during the five year rental period.  You would then 
need to determine if the debtor could have avoided the judgment during 
the bankruptcy under 522(f) to know whether it's worth pursuing, because 
unless something has changed with the Bankruptcy Act they could still 
reopen the case and avoid the lien.


As to Dwight's second paragraph I I'm not sure either side could do a 
motion in the bankruptcy court since it's really asking for declaratory 
relief.  That might require an adversary proceeding rather than a 
motion, and unlike a 522(f) motion I'm not sure you could reopen the 
case for such an adversary proceeding.  This might be an area where the 
state courts would have concurrent jurisdiction to determine whether or 
not the lien attached pre-petition.  If the state court has that 
jurisdiction and decides it did attach pre-petition, then the bankruptcy 
court could still determine whether it could be avoided under 522(f).  I 
think the bankruptcy court may have exclusive jurisdiction on that issue.


Disclaimer:  I'm old, forgetful (or at least so says my wife) and I have 
not practiced bankruptcy for approximately 15 years now, none of which 
was under the current Bankruptcy Act.  Oddly I think my recollection for 
the material in the first paragraph is better than for the second, even 
though the latter is over 35 years old. I would advise looking to a 
current bankruptcy practitioner to get their analysis of how to proceed 
if the property was in fact not homestead property for a period of time 
between entry of the judgment  and the filing of bankruptcy.

Kary L. Krismer
206 723-2148

On 9/29/2020 2:30 PM, Dwight Bickel wrote:
> My understanding about the relevant law is that the lien did not 
> attach to the real property prior to the filing of the bankruptcy, 
> because the property was homestead. I presume homestead was formally 
> stated in the bankruptcy petition, without contest that is now 
> established. See /Lien v. Hoffman/ , 49 Wash. 2d 642 (Div II 1957). I 
> don't remember that issue discussed in a subsequent case. It pre-dates 
> RCW 6.13.090 related to creating a lien upon excess value in homestead 
> property, which was not done in your case.
>
> After the Discharge, the creditor is prevented from further enforcing 
> the debt, so the creditor is barred from recording that judgment or 
> other execution procedures. I don't think 11 USC 522 (f) is needed 
> because there is no lien upon the real property, but if you have 
> difficulty convincing a title company to remove that judgment as an 
> exception to allow a mortgage or a sale, it might be possible to seek 
> that Order confirming there is no lien that would interfere with the 
> homestead exemption. I have not seen a motion for that Order in these 
> circumstances.
>
> Dwight A. Bickel
> Washington Title Professional
> dwightbickel at hotmail.com
> www.linkedin.com/in/dwightbickel
> http:/www.titleadvisor.com
> 206-484-1976
>
>
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